How To Get The Biggest Social Security Check

Social Security is a program designed to be a substantial safety net for all Americans and an important source of retirement income. It is imperative that every American understand how to take advantage of opportunities that are available to them in Social Security because how much a worker contributes into the retirement savings plan isn’t the only factor that determines how much of a monthly payout you will be given.

Timing is Everything
The single biggest boost to a person’s social security retirement income comes as a result of delaying when benefits are applied for. Under current law, a person may elect to start receiving income at as early as age 62. Current full retirement age is 66. However, if a person properly plans for their retirement, they can delay receiving benefits until age 70 – the maximum age the government allows a person.

What difference does it make to delay receiving Social Security benefits? Let’s take a look and see. Take for example a person who opts to receive their social security benefits as soon as they are eligible at age 62. Suppose that payout results in a monthly benefit of $1,500. If that same person were to defer collecting benefits until reaching the age of full retirement which is 66, they monthly benefit would now be $2,000. Put another way, deferring benefits for four years results in an additional monthly benefit of $500 for life which additional benefit is indexed for inflation. Now, if the same person were to defer collecting benefits until the maximum allowable age which is 70, the monthly benefit would now have increased to $2,640. Comparing this to the benefit received at age 62 is a difference of $1,140 per month for life.
Think of delaying the age at which you start collecting benefits as purchasing an annuity with an accumulation phase of 4-8 years. A person in this example, who would have delayed eight years of benefits, would have paid (via deferred benefits) $1,500/mo * 12 mo/yr * 8 yr = $144,000. In exchange, their annual benefit credit would increase by 8%. Every year thereafter after age 70, they receive an additional $1,140/mo x 12 = $13,680/yr which means that after roughly ten years (age 80) they would reach the break-even point. If they live until age 90, they would have earned over $136,000 in additional benefits. There isn’t an annuity available in the private sector that can beat the annuity-like increase in the Social Security pension resulting from deferring the age to collect benefits.

Okay, but what about those who need some income from age 62 to 70?
If a person wants to take advantage of the option above, but doesn’t have a job or other sources of retirement income to live off of such as IRA, company pension, or 401k, all is not lost. In fact, if that person is married and their spouse has earned Social Security benefits, claiming the spousal benefit which is an amount equal to 50% of that other spouse’s benefit may provide just enough income to last until age 70. Doing so will not affect the other spouse’s benefit. In fact, the higher wage earning spouse can continue to work and further increase their Social Security pension via their payroll tax contribution and get an even bigger benefit than what was mentioned above. Even if a person is divorced, but was married for ten years or more, the ability to claim a spousal benefit may available subject to certain conditions even if the person who wants to claim spousal benefits on their ex-spouse has remarried.

There is much more to the points mentioned above that will factor in to how a person goes about collecting the Social Security pension they have paid into during their working years. Proper retirement planning now will enable a person to live a more comfortable life during their retirement years than otherwise possible.

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